Starting and running a business is exciting—but the paperwork? Not so much. As an employer, compliance is key in every aspect, especially in payroll. In the sea of information business owners receive, one thing that often gets overlooked but is vital to successful operations is ERN numbers.
While it may not look like much, it’s key to everything from paying your staff to securing insurance.
Don’t know what your ERN is? Don’t worry, we’ll outline everything you need to know, from what an ERN number is, why it matters, and how to find (or avoid needing) one—without the headache.
What is an ERN number?
ERN numbers are a unique identifier given to each employer by HMRC (Her Majesty’s Revenue and Customs) when you register as an employer for Pay As You Earn (PAYE). This number is used for tax and payroll purposes, like when calculating tax for your employees.
It’s also known as the PAYE reference number, which you’ll see on payroll-related documents.
Not only are ERN numbers important for payroll administration, but they also come into play for tax compliance and employee verification, as well as for insurance purposes and accessing online services.
What does an ERN number look like?
Let’s break down what makes an ERN number so you can easily find it.
Your ERN number is a combination of a 3-digit HMRC number (this identifies the office that deals with your business) and a unique reference solely for your business, separated by a slash.
So, something like this: 123/AB45678
It’s worth noting that if your business was registered before 2001, it will look slightly different as ERN numbers after this gained an additional letter in the unique reference part—otherwise, it’s the same as above but with one less letter.
How do I find my ERN number?
You can find your employer reference number in several places:
- Inside the yellow welcome booklet supplied by HMRC when you first registered as an employer,
- Other communication from HMRC about PAYE,
- Alternatively, you can contact the HMRC employer’s helpline.
You won’t find your ERN on Companies House filings, VAT certificates, or business bank statements—it’s strictly tied to PAYE and payroll-related documents.
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What are ERN numbers used for?
Employer reference numbers can be used in different ways. As an employer, you’ll need your ERN number as a tax reference number when completing end-of-year PAYE returns. If you were to input the wrong number, the claim would be rejected so it’s important to get this right!
Other times you’ll need your ERN number are:
- When completing any payroll-related paperwork; from payslips to P45s,
- Purchasing or renewing Employers’ Liability Insurance,
- And, at the request of employees to access their employment history or for applying for tax credits.
HMRC will also use your number for:
- Tax collection: HMRC will need your employer reference number to administer or collect any taxes surrounding your payroll. This includes National Insurance contributions and income tax. Your ERN number connects your payroll records to the PAYE scheme you are registered with.
- Compliance monitoring: As your unique number is linked to your payroll administration, it can be used by HMRC to track your payment history and ensure you are abiding by payroll and tax legislation. Paying an incorrect amount of tax or National Insurance, or submitting payroll-related paperwork late can result in enforcement action. Companies like Cintra can help to alleviate this possibility, automating processes and streamlining payments.
It’s worth noting that if you operate more than one PAYE scheme—for example, across different branches or legal entities—you may have multiple ERNs so make sure to use the correct ERN for each payroll submission!
What is Employers’ Liability Insurance?
Employers’ Liability Insurance helps businesses to compensate employees in the event of an injury or work-related illness. It is a legal requirement under the Employers’ Liability Act 1969 and must start as soon as you become an employer.
By law, your ERN must appear on your Employer’ Liability Insurance certificate.
Does every employer need an ERN?
No, every employer does not need an ERN number. You are ERN exempt if your company:
- Has no employees,
- Only works with self-employed individuals,
- Has employees who are all paid below the Lower Earnings Limit (currently £125 a week) and they do not have another job or currently receive a pension or benefits,
- Or, are registered in Jersey, Guernsey, or the Isle of Man.
As soon as you employ your first employee, you need to register for an ERN number via HMRC.
Making payroll understandable
Getting your head around the many different terms and legislations regarding payroll can be a challenge, especially in larger organisations. That’s where we come in.
Why not chat with one of our payroll professionals to see how we can help make your process stress-free, integrating seamlessly into your business? Book a demo to see how we e-rn our status as payroll pros.
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